"Mediocrity knows nothing higher than itself.”
-Arthur Conan Doyle
I like that quote. I’m borrowing it from the creator of Sherlock Holmes this morning. It’s a summary statement for what to think about NASDAQ and Crypto Crazies every time they make a Bear Market lower-high at the top-end of my Risk Ranges.
It’s not just month-end markup time to market “YTD Returns”, it’s “tryout season” for “elite” Youth Hockey here in the Tri-States. NASDAQ Crazies are nothing compared to some of these helicopter-hockey-parents!
Not unlike parents who have never played hockey at a high level, most people who remain long of The Mother of All Bubbles (NASDAQ, Crypto, Meme Stocks, 0DTE Calls, etc.) have been generally Macro Unaware for going on 17 months.
Back to the Global Macro Grind…
BREAKING: “NASDAQ re-enters Bull Market”
I couldn’t make that up if I tried, but that’s what CNBC and Old Wall Perma Bull clickbait types were running with post yesterday’s US stock market close.
A big #behavioral thing about living in a bubble is that almost anything is easy to believe until your bubble pops.
By the Old Wall definition of “bull market”, the NASDAQ would have been in a “bull market” 8x during the 2000-2002 Bear Market. All the crazies who chased every Bear Market LOWER-HIGH back then left markets for a few decades or forever.
Imagine you got levered long NASDAQ at the end of January 2001 or 2023:
A) You know those were the “best January’s” for the NASDAQ, right?
B) Behaviorally, it makes sense. You just chase what you’re still bag-holding or believe
That’s another thing about believing in bubbles – it’s really easy to do because you don’t have to understand anything.
Having been on the right side of not only this entire Bear Market for going on 16 months, but also having the Old Bear Patience of WAITING for Bear Market Rallies before re-entering the Short Side, I’m grateful for Crazies!
Unlike Crazies and Perma Bulls, my track record trading Tech (XLK) suggests I’m a perfectly objective angel, eh?
A) 24 straight successful Real-Time Alert #timestamps in Long/Short Tech (XLK) going back to 2019
B) My last win on the LONG Side of Tech (XLK) was actually as late in The Cycle as JAN 12, 2022
The reason why most would never #timestamp whatever is coming out of their mouths on TV is it would be the end of their compensation/career. I love #timestamping for many reasons. The #1 reason is learning from my public mistakes.
So, to all my loathers out there (hugs and kisses, xoxo), 17 of those 24 #timestamps were shorts. And I just re-shorted XLK on NASDAQ not re-entering a “bull market”:
A) Post the latest Bear Market Rally, NASDAQ remains in #Quad4 Crash mode at -25.7% from its #Quad2 Cycle Peak
B) You’d have to be up +34.6%, from here, to get back to breakeven if you’re bag-holding the highs
Bag-holders? What are those? NASDAQ hit its recent Cycle Lows in December 2022 and no one was long it on the way down but they all own it from JAN 1 and have that as their Full Investing Cycle Return? LOL
Btw, if you were Long NASDAQ yesterday, congrats… but the real juice was in owning these Goldman Bear Baskets:
A) Bitcoin Sensitive Equities Basket = +5.6% on the day
B) GS Profitless Tech Basket = +3.5% on the day
And for those of you who are old enough to remember both Goldman and Perma Bull Ackman begging for Fed cuts and #BankBailouts less than 2 weeks ago before you got your bags back, now what?
Dammit, there’s that thing called The Profit Cycle and the Yield Curve, eh?
A) Q1 EPS are currently running down -27.4% year-over-year (but don’t tell anyone about EPS Season pending)
B) Yield Curve just re-inverted to -52 basis points on 10s minus 2s (that’s a -17bps inversion in a week)
And yes, I get it. I was totally cherry picking on Earnings Season with only 15 of the SP500’s companies having reported reality. But I wouldn’t be surprised if that’s what SPX Earnings are down from there Cycle Peak after they’ve bottomed.
You see, that’s probably the biggest difference between the Old Thunder Bay Bear and Baby Bears and Bulls alike. The Baby Bears get the bear case (they’re bearish), but need/want it all to crash and happen all at once…
And the Perma Bulls like Gerbs and Dan Ives are just crazies…
So it takes some of us Old Bears to teach them what I started with this morning. Playing at the highest level of The Game, and executing across Full Bull & Bear Market Investing Cycles requires next level long-term patience.
Mediocrity lives with STPPD (short-term-performance-panic disorder). As a hockey parent, don’t be a crazy either.
Immediate-term Risk Range™ Signal with @Hedgeye TREND signal in brackets
UST 30yr Yield 3.56-3.83% (bearish)
UST 10yr Yield 3.31-3.65% (bearish)
UST 2yr Yield 3.68-4.29% (bullish)
High Yield (HYG) 72.76-74.54 (bearish)
SPX 3 (bearish)
NASDAQ 11,445-11,996 (bearish)
RUT 1 (bearish)
Tech (XLK) 139-148 (bearish)
Gold Miners (GDX) 29.25-32.72 (bullish)
VIX 18.65-25.90 (bullish)
USD 102.00-104.35 (bullish)
CAD/USD 0.725-0.738 (bearish)
Oil (WTI) 66.01-74.47 (bearish)
Oil (Brent) 71.68-79.38 (bearish)
Nat Gas 1.99-2.49 (bearish)
Gold 1 (bullish)
Silver 21.97-23.99 (bullish)
Bitcoin 22,780-29,731 (bearish)
Best of luck out there today,
KM
Keith R. McCullough
Chief Executive Officer
